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Congressman Chris Chocola accepted thousands of dollars from defense contractor

PACs.

PAC contributions from defense contractors working in Iraq (not including
contributions from PACs of defense contractors not working in Iraq.):

Contractors Contribution
Washington Group International PAC $1,000
Bechtel PAC Committee $1,500
Northrop Grumman PAC (contract awarded to Vinnell Corporation,
a Northrop subsidiary) $3,250
Total $5,750
Source: PoliticalMoneyLine

The Center for Public Integrity’s investigation, “Windfalls of War,” identified the
contractors that received contacts for work in Iraq and Afghanistan from the Department
of Defense.

• The methodology for the investigation done by the Center for Public Integrity can
be reached here:
http://www.publicintegrity.org/wow/default.aspx?act=methodology
• “Windfalls of War,” The Center for Public Integrity list details for the contractors
that received contracts in Iraq:
o Washington Group International:
http://www.publicintegrity.org/wow/bio.aspx?act=pro&ddlC=65
o Bechtel Group:
http://www.publicintegrity.org/wow/bio.aspx?act=pro&ddlC=6
o Vinnell Corporation:
http://www.publicintegrity.org/wow/bio.aspx?act=pro&ddlC=64

Then he opposed penalties for contractors…

• Rep. Chocola voted against Higgins, D-N.Y., motion to recommit the bill to the
Judiciary Committee with instructions to add language that would impose stricter
criminal and civil penalties on corporations who intentionally overcharge the
federal government for the provision of goods and services in response to a
presidentially declared major disaster, emergency or military action, including in
Iraq and Afghanistan.[HR 1751, CQ Vote 584, 11/9/05]1

Other provisions to impose penalties for or stop profiteering that Rep. Chocola voted
against:

• Waxman, D-Calif., amendment that would prohibit the awarding of a contract by
the secretary of the Army to any contractor if the Defense Contract Audit Agency
has determined that more than $100 million of a contractor's costs involving work
in Iraq were unreasonable. [HR 4939, CQ Vote 60, 3/16/06]

o According to the San Francisco Chronicle, “lawmakers rejected an
amendment offered by Rep. Henry Waxman, D-Los Angeles, that would
have cut off future contracts in Iraq for Halliburton Co. Waxman
argued that Halliburton had billed the Pentagon for unsupported and
unreasonable' charges exceeding $1 billion in connection with its work for
the military.”2

• Tierney, D-Mass., motion to recommit the bill to the House Judiciary Committee
with instructions to include language that would prohibit profiteering and fraud in
connection with the war and reconstruction efforts in Iraq. [HR 1279, CQ Vote
167, 5/11/05]

• Tierney, D-Mass., amendment that would provide $5 million to establish a select
committee to investigate reconstruction efforts in Iraq and Afghanistan, including
contracting procedures, protection against money laundering, and the allocation of
contracts to foreign companies and small businesses. [HR 1268, CQ Vote 72,
3/15/05]

… like Halliburton, who overcharged the military in Iraq.

• A March 28, 2006 15-page report cites findings by the Pentagon’s Defense
Contract Audit Agency that Halliburton3 overcharged – “apparently
intentionally” -- on the contract by using hidden calculations, and attempted in
one instance to bill the government for $26 million in costs it did not incur.
Auditors also challenged $45 million in other costs, labeling them as
“unreasonable or unsupported,” the report said.4,5

• The Pentagon’s Project and Contracting Office evaluating Halliburton’s request
for award fees found that Halliburton repeatedly overcharged the taxpayer,
apparently intentionally. In one case, “[c]ost estimates had hidden rate factors
to increase cost of project without informing the Government.” In another
instance, Halliburton “tried to inflate cost estimate by $26M.” In yet a third
example, Halliburton claimed costs for laying concrete pads and footings that
the Iraqi Oil Ministry had “already put in place.” 6

• Other Companies Have Engaged in Similar Questionable Practices - The Air
Force found that another U.S. government contractor, Custer Battles, set up shell
subcontractors to inflate prices. Those overcharges were passed along to the U.S
government under the company’s cost-plus contract to provide security for
Baghdad International Airport. In one case, the company allegedly took Iraqi-
owned forklifts, re-painted them, and leased them to the U.S. government.
[Department of the Air Force, Memorandum in Support of the Suspension of
Custer Battles LLC, et al., 9/20/04]

• According to Government Executive magazine, a jury “ordered Custer
Battles, a military contractor, to pay $10 million for fraudulently billing
the government on Iraq reconstruction contracts. … The jurors in the
federal courthouse in Alexandria, Va., found Thursday that Custer Battles
and its owners, Scott Custer and Michael Battles, had overcharged the
government on a contract to replace old Iraqi currency with new bills.
[Government Executive, 3/10/06]

• Companies Aren’t Being Held Accountable – According to Congressional
Quarterly, U.S. Comptroller General David M. Walker told the House
Government Reform subcommittee “that the lack of progress in rebuilding Iraq
was in part due to the failure of the executive and the legislative branch to hold
Defense contractors accountable for mismanagement and waste. … Walker
mentioned security as a key reason for the failure to restore basic services to the
Iraqi people. But he said the Pentagon’s inability or reluctance to hold contractors
accountable also had contributed to the problems.” [CQ, 4/25/06]

At a time when soldiers didn’t have enough body armor.

• The New York Times reported on January 7, 2006 that “a secret Pentagon study”
found that “as many as 80 percent of the marines who have been killed in Iraq
from wounds to the upper body could have survived if they had had extra body
armor. Such armor has been available since 2003, but until recently the Pentagon
has largely declined to supply it to troops despite calls from the field for
additional protection, according to military officials.”7

[Image of war costs in image background]

From the Washington Post, “Projected Iraq War Costs Soar,” 4/27/06:
Source: http://www.washingtonpost.com/wp-
dyn/content/article/2006/04/26/AR2006042601601.html

Tom DeLay, Dick Cheney. And now Chris Chocola. Another republican caught red
handed.

Example of Tom DeLay Caught Red-Handed

On September 29, 2005, Tom DeLay was “indicted in a Texas finance probe.”8

• DeLay “stepped aside as majority leader” after he was indicted in Texas. 9

• After winning his GOP primary in March, he announced he would “resign from
Congress in the coming weeks.” 10

According to the Associated Press,, “while the state case moves on, a continuing U.S.
Justice Department probe into Washington corruption has netted guilty pleas from two of
DeLay's former aides and former lobbyist Jack Abramoff, once a key DeLay ally.”11

Rep. DeLay voted against Higgins, D-N.Y., motion to recommit the bill to the Judiciary
Committee with instructions to add language that would impose stricter criminal and civil
penalties on corporations who intentionally overcharge the federal government for the
provision of goods and services in response to a presidentially declared major disaster,
emergency or military action, including in Iraq and Afghanistan.[HR 1751, CQ Vote
584, 11/9/05]

Defense Contractors Contributions to Rep. Tom DeLay:

Contractors Contribution
Halliburton Company PAC $13,000
Brownbuilders PAC of Brown & Root, Inc Employees $19,828
Fluor Corporation PAC $51,200
Washington Group International PAC $5,000
Shaw Group Inc. PAC $100
Bechtel PAC Committee $10,100
CH2M Hill Companies LTD PAC $5,250
Lucent Technologies, Inc. PAC $200
Northrop Grumman PAC (Vinnell Corporation Subsidiary) $37,700
Motorola Inc. PAC $7,500
Raytheon Compnay PAC (Raytheon Technical Services) $17,500
Total $167,378
Source: PoliticalMoneyLine

Chocola’s Connections to Rep. Tom DeLay

• Chocola has taken $40,000 from DeLay’s Americans for a Republican Majority
PAC (ARMPAC).12

• Chocola gave $2,500 to Tom DeLay’s legal defense fund.13

Example of Dick Cheney Caught Red-Handed

Cheney appears to have been incorrect in stating that he did not have ties to Halliburton
even while his office was coordinating no-bid rebuilding contracts in Iraq for
Halliburton.

Cheney said September 21, 2003 on NBC that since becoming vice president, “I've
severed all my ties with the company, gotten rid of all my financial interest. I have no
financial interest in Halliburton of any kind and haven't had, now, for over three years.”
14

A report by the Congressional Research Service undermines Vice President Dick
Cheney’s denial of a continuing relationship with Halliburton Co.15

• The report says “deferred salary or compensation received from a private
corporations in the reportable year is considered as among the ‘ties’ retained in or
‘linkages to former employers’ that may ‘represent a continuing financial interest
in those employers, which makes them potential conflicts of interest.” 16

• Cheney’s 2003 Executive Branch Personnel Public Financial Disclosure Report
indicates that he received an “Elective Deferred Compensation Plan” from
Halliburton.17

• In March 2003, the Pentagon awarded a subsidiary of Halliburton a no-bid
contract worth $7 billion to help rebuild Iraqi oil fields. According to court
documents obtained by Time Magazine, an internal Pentagon e-mail said “action”
on the contract was “coordinated” with the Vice President’s office.18

• According to the Washington Post, “in the fall of 2002, a senior political
appointee in the Defense Department chose oil services giant Halliburton Co. to
secretly plan how to repair Iraqi oil fields, and then briefed Vice President
Cheney's chief of staff and other White House officials about the sole-source
contract before it was granted.”19

1Congressional Record Language of the Amendment [Congressional Record,
11/9/05]

SEC. __. PROHIBITION OF PROFITEERING AND FRAUD IN CONNECTION
WITH MILITARY ACTIONS AND DISASTER RELIEF.
(a) IN GENERAL.--Chapter 63 of title 18, United States Code, is amended by adding
at the end the following:``§1351. Profiteering and fraud in connection with military
actions and disaster relief
``(a) PROHIBITION.--Whoever, directly or indirectly, in any matter involving a
contract with the Federal Government or the provision of goods or services to or on
behalf of the Federal Government, in connection with military action, or relief or
reconstruction activities in Iraq or Afghanistan or any other foreign country, or relief or
reconstruction efforts provided in response to a major disaster declaration under section
401 of the Disaster Relief Act of 1974, or an emergency declaration under section 501 of
the Disaster Relief Act of 1974, knowingly and willfully--
``(1) executes or attempts to execute a scheme or artifice to defraud the United States;
``(2) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
``(3) makes any materially false, fictitious, or fraudulent statements or representations,
or makes or uses any materially false writing or document knowing the same to contain
any materially false, fictitious, or fraudulent statement or entry; or
``(4) materially overvalues any good or service with the specific intent to excessively
profit from the federal disaster or emergency;
shall be fined under subsection (b), imprisoned not more than 30 years, or both.
``(b) FINE.--A person convicted of an offense under subsection (a) may be fined the
greater of--
``(1) $1,000,000; or
``(2) if such person derives profits or other proceeds from the offense, not more than 3
times the gross profits or other proceeds.''.
(b) CLERICAL AMENDMENT.--The table of sections at the beginning of chapter 63
of title 18, United States Code, is amended by adding at the end the following new item:
``1351. Profiteering and fraud in connection with military actions and disaster relief.''.
2
San Francisco Chronicle, 3/17/06: http://www.sfgate.com/cgi-
bin/article.cgi?file=/chronicle/archive/2006/03/17/MNGJDHPS701.DTL

3Document refers to Kellogg, Brown, and Root, a fully-owned subsidiary of
Halliburton.
According to the Halliburton website, in 1961, Halliburton acquired Brown &
Root. [http://www.halliburton.com/about/history_entrep.jsp ]

According to the Halliburton website, in March 2002, Halliburton announced
plans to separate our business groups into two wholly-owned operating
subsidiaries: Halliburton's Energy Services Group, and KBR, the engineering and
construction group.
[http://www.halliburton.com/about/history_new_phase.jsp]

According to the Center for Public Integrity, Kellogg, Brown & Root is the
engineering and construction arm of the Halliburton Company, which calls itself
"the world's largest diversified energy services, engineering and construction
company" with operations in more than 100 countries and 2002 sales of $12.4
billion. [Center for Public Integrity]
4
Los Angeles Times, 3/29/06
5 Here’s the full timeline on Halliburton’s audits for overcharging:

Restore Iraqi Oil (RIO) Contract Timeline

On March 8, 2003 the U.S. Army Corps of Engineers awarded Halliburton
subsidiary KBR a no-bid monopoly contract to restore and operate Iraq’s oil
infrastructure. Under the contract, the DOD issued ten task orders to Halliburton
for oil related work in Iraq.

On December 11, 2003, the DCAA announced at a press conference that it had
completed a preliminary draft audit of Halliburton’s fuel importation work and
found that Halliburton had overcharged the government by as much as $61
million for gasoline imported from Kuwait to Iraq. The audit was preliminary
and only covered the period until September 30, 2003. [U.S. Department of
Defense, New Briefing, 12/11/03]

In 2004 and 2005, DCAA completed audits of each of the ten task orders and
identified $219 million in “questioned” costs under the entire RIO contract.
[DCAA Audits on the 10 RIO contract task orders]

• DCAA also identified $60 million in “unsupported” charges under the
RIO contract. [DCAA Audits on the 10 RIO contract task orders]

• According to the DCAA Contract Audit Manual, “questioned costs” are
costs “on which audit action has been completed” and “which are not
considered acceptable.” Questioned costs may be determined
unacceptable for several reasons: they may be “unallowable” under the
contract terms; they may not be “allocable” because they are not “incurred
specifically for the contract,” of they may be “unreasonable in amount.”
Costs are considered unreasonable in amount when they “exceed that
which would be incurred by a prudent person in the conduct of a
competitive business.” DCAA classifies charges as “unsupported” when
“the contractor does not furnish sufficient documentation to enable a
definitive conclusion” about the acceptability of the charges.

Revised audits lowered the total amount of questioned and unsupported costs to
$263 million. [New York times, 2/27/06]

The Pentagon's Defense Contract Audit Agency “questioned $263 million in costs
for fuel deliveries, pipeline repairs and other tasks that auditors said were
potentially inflated or unsupported by documentation. … The Army decided to
pay all but $10.1 million of those contested costs.” [New York times, 2/27/06]

• DCAA says Halliburton’s cost proposals were “not acceptable for
negotiation of a fair and reasonable price.” [DCAA Audit on RIO order
no. 10, 8/31/2004]

The Army Corps rejected the auditors’ findings and paid Halliburton for $253 of
the challenged costs. That represents over 96% of the $263 million in costs
challenged by the auditors. [New York times, 2/27/06]

Restore Iraqi Oil 2 (RIO 2) Contract Timeline

On January 16, 2004 the Army Corps of Engineers announced the awarding of a
pair of RIO 2 contracts to Parsons Corporation ($800 million) and Halliburton
($1.2 billion). [U.S. Army Corps of Engineers, Press Release, 1/16/04]

• The contract is overseen by the Project and Contracting Office (PCO), which
is operated by the Defense Department. A private contractor, Foster-Wheeler,
assists the PCO in overseeing both RIO 2 contracts.

On May 29, 2004, the PCO provided Halliburton with a detailed description of
the cost reporting it expected from the company. [Letter from CPA, Program
Management Office to KBR Contracts Manager, 5/29/04]
On July 15, 2004, Halliburton was informed by the PCO that its “reporting
needed to slow changes which have been made in the last six months to visibly
demonstrated we are not repeating past mistakes of the RIO contract.” [KBR,
Minutes of Meeting, 7/15/04]

On August 28, 2004, the PCO sent Halliburton a sharply worded “letter of
concern,” saying “you have universally failed to provide adequate cost
information as required.” [Letter from Project and Contracting Office to KBR,
8/28/04]

• According to the PCO, its “own failed attempts to get [Halliburton] to
provide adequate cost information under this contract” and adverse audit
findings “reflect profound systemic problems.” [Letter from Project and
Contracting Office to KBR, 8/28/04]
• The PCO also said Halliburton was “accruing exorbitant indirect costs at a
rapid pace.” [Letter from Project and Contracting Office to KBR, 8/28/04]

An October 29, 2004 report by Foster-Wheeler found that “unacceptable
unchecked cost reports [were] being issued by Halliburton. [Foster-Wheeler,
Cost Review Meetings at KBR Offices, Basra – 25-29 Oct 4, 10/29/04]

• The report also said there was a “lack of cost control… in Houston,
Kuwait, and Iraq” under on task order. [Foster-Wheeler, Cost Review
Meetings at KBR Offices, Basra – 25-29 Oct 4, 10/29/04]

On November 11, 2004, the PCO stated that Halliburton’s recent monthly cost
report “does not meet minimum standards.” [Memorandum from Project and
Contracting Office to KBR, 11/11/04]

• The PCO also said that Halliburton “failed to provide an adequate costs
report in the nine months since contract award.” [Memorandum from
Project and Contracting Office to KBR, 11/11/04]
• The PCO warned that continued “substandard cost reports could result in
a cure notice. [Memorandum from Project and Contracting Office to KBR,
11/11/04]

A November 22, 2004 cost review found that Halliburton’s description of the
progress made on an oil field project to be “misleading” and “distorted.” [Foster-
Wheeler, Follow-Up Cost Review – Qarmat Ali Water Inejction, 11/22/04]

On January 29, 2005 the PCO issued a “cure notice.” The letter notified
Halliburton that its RIO 2 contract could be terminated if the ongoing problems
were not cured. The contracting officer stated that Halliburton’s “failure to
deliver a useable, accurate cost report” was “endangering performance of the
contract.” [Letter from Project and Contracting Office to KBR, 1/29/05]

• The cure notice also stated that Halliburton’s “lack of cost containment
and funds management is the single biggest detriment to this program.”
[Letter from Project and Contracting Office to KBR, 1/29/05]

A March 7, 2005 letter to from the PCO said that they were concerned that “it
appears as though KBR is billing the Government on estimated hours versus
actual costs incurred.” [Letter from Project and Contracting Office to KBR,
3/7/05]

A March 21, 2005 analysis of Halliburton’s February cost report said; “Baseline
schedules are continually changing from one month to the next, making it
impossible to evaluate the slippage against the original plan.” [Foster Wheeler,
SPCOC Critique – KBR Feb 2005 Monthly Report, 3/21/05]

RIO 2 Contract Cost Overruns

Halliburton claimed costs for laying concrete pads and footings that the Iraqi
Ministry of Oil “had already put in place.” [Project and Contracting Office, KBR
Award Fee Board, Up to 29 Jan 05]

Halliburton “tried to inflate [a] cost estimate by $26 million by paying “Turkish
suppliers above the actual costs incurred.” [Project and Contracting Office, KBR
Award Fee Board, Up to 29 Jan 05]

Halliburton on another project “could never justify quotes. When the
Government pressed the issue and an actual quote was produced, the quote was
50-75$ lower.” [Project and Contracting Office, KBR Award Fee Board, Up to 29
Jan 05]

DCAA Audits of RIO 2 Contract Revealed Questioned and Unsupported Costs

The DCAA provided four initial audits to the House Government Reform
Committee that examined $111 million in Halliburton costs under three task
orders. The DCAA challenged $57 million in costs as questioned or
unsupported. [DCAA RIO 2 Task Order Audits]
• The DCAA repeatedly found that Halliburton “was unable to provide
adequate justification of price reasonableness for proposed equipment,
material, subcontract and other direct costs. … We do not believe the
contractor’s proposal is an acceptable basis to negotiate a fair and
reasonable price due to the significant inadequacies in the cost and
pricing data.” [DCAA RIO 2 Task Order Audits]

In a briefing to the House Government Reform Committee, the DCAA said that
eight additional audits had been completed and three were ongoing which may
supersede the initial four audits. The DCAA identified $41 million in
questioned costs and $4 million in unsupported costs for a total of $45 million
in costs that have been challenged. [Briefing by Defense Contract Audit Agency
for Committee on Government Reform staff, 3/3/06]

6 United States House of Representatives Committee on Government Reform — Minority Staff Special
Investigations Division, 3/28/06, http://www.democrats.reform.house.gov/Documents/20060328142928-
38362.pdf
7
New York Times, 1/7/06,
http://www.nytimes.com/2006/01/07/politics/07armor.html?ei=5088&en=bff219647cae4821&ex=1294290
000
8
Washington Post, 9/29/05
9
Associated Press, 4/19/06
10
Associated Press, 4/19/06
11
Associated Press, 4/19/06
12
FEC Disclosure, www.fec.gov

13 Public Citizen, www.citizen.org
14
Associated Press, 9/26/03
15
Memorandum, Official’s Stock Options In and Deferred Salary From a Corporation as a “Financial
Interest” of an Executive Branch Official in Such Corporation, Congressional Research Service, 9/22/03,
http://www.halliburtonwatch.org/news/crs.pdf
16
Memorandum, Official’s Stock Options In and Deferred Salary From a Corporation as a “Financial
Interest” of an Executive Branch Official in Such Corporation, Congressional Research Service, 9/22/03,
http://www.halliburtonwatch.org/news/crs.pdf
17
Vice President Dick Cheney’s 2003 Executive Branch Personnel Public Financial Disclosure Report,
http://www.opensecrets.org/pfds/pfd2003/N00006237_2003.pdf

18 Time Magazine, 5/30/04,
http://www.cnn.com/2004/ALLPOLITICS/05/30/cheney.halliburton/
19
Washington Post, 6/14/04
http://www.washingtonpost.com/wp-dyn/articles/A39073-2004Jun13.html